Turkey, Azerbaijan sign pipeline deal

ANKARA, Turkey, Dec. 28 (UPI) -- Turkey and Azerbaijan this week signed an agreement for a new "Trans-Anatolian" natural gas pipeline stretching from Turkey's eastern to western borders.

The 2,400-mile, $5 billion pipeline would transit natural gas from Azerbaijan's Shah Deniz II fields in the Caspian Sea across Turkey and would become part of the basis of a new Southern Corridor gas route to European markets.

The stand-alone pipeline could also be connected to proposed Nabucco pipeline project, which is designed to carry gas from the Caspian region and the Middle East through Turkey to Europe.

The deal to build the Trans-Anatolian pipeline was signed in Ankara Monday by Turkish Energy Minister Taner Yildiz and Natiq Aliyev, Azerbaijan's industry and energy minister.

Aliyev said the pipeline start out carrying 16 billion cubic meters of gas per year but eventually could increase that amount to 24 billion cubic meters per year, the Turkish daily Today's Zaman reported.

Of that amount, 6 billion cubic meters would be sold to Turkey while some 10 billion cubic meters would go to European markets, Aliyev said.

A consortium consisting of the State Oil Company of the Azerbaijani Republic -- SOCAR -- the state-owned Turkish Pipeline Corp. -- or BOTAS -- and the Turkish Petroleum Corp. was established to construct the project.

Others would be allowed to join the consortium once the project is under way, the two energy ministers said, adding plans are to begin to start construction as soon as possible in 2012 and complete the pipeline by late 2017.

Yildiz said the Trans-Anatolian project doesn't mean Ankara has backed off on its support for the ambitious, EU-backed Nabucco pipeline, which some analysts have said would be made redundant by the new pipeline, the Anatolian News Agency reported.

"We are Nabucco's partner and we have 16 percent share," he said. "We have made a hard effort to realize that [Nabucco] project and continue to make efforts. The Trans-Anatolian natural gas pipeline is an important alternative."

The Nabucco pipeline is meant to diversify Europe's gas supplies away from Russia but Azerbaijan could supply only half of its massive proposed capacity. The rest would come from still-unsecured sources in Turkmenistan, Iran and Iraq.

It is competing with Interconnector Turkey-Greece-Italy, the Trans Adriatic Pipeline and the South East Europe pipelines to tap the Shah Deniz II gas fields.

A top official of TAP told the Hurriyet Daily News SOCAR's decision to build the Trans-Anatolian pipeline could be a significant blow to the chances of Nabucco's landing the rights to Azerbaijan's Caspian fields, which are controlled by SOCAR, BP and Norway's Statoil.

Cenk Pala, Turkey's representative on the TAP project, told the newspaper the Trans-Anatolian pipeline will be better able to supply Europe in the short run than Nabucco due to the latter's lack of suppliers other than Azerbaijan.

"Europe talks about the Turkmen gas, almost two-thirds of which they lost to Russia with a 2003 agreement," Pala said, adding, "Nabucco is a commercially driven project and no investment decision can be made unless the supplies are granted beforehand."